GRAND RAPIDS, Mich. (WOOD) — The repeal of a century-old Michigan law that bans unmarried couples from living together would help some couples save on taxes, experts say.
The state Senate voted 29-9 Wednesday to get rid of the ban.
The law hasn’t been enforced in decades but its elimination would change how Michigan taxes work. Sen. Stephanie Chang, D-Detroit, sponsored the repeal to reduce the tax burden for unmarried couples.
“It’s really just about bringing us into the 21st century,” Chang said.
“This law will help some individuals in our state by reducing their taxpayer burden,” she added. “It will place unmarried Michigan taxpayers on equal footing with taxpayers in almost every other state.”
Currently, it’s a misdemeanor for unmarried couples to live together, carrying up to a year in prison. The only other state with a similar law on the books is Mississippi.
Several Republicans, like Sen. Thomas Albert, R-Lowell, voted against repealing the bill because it would change tax benefits.
“I very much agree that the criminal penalty is an unjustified means to an end and it should be removed. I cannot, however, close my eyes to the secondary effects of this bill,” Albert said.
Right now in Michigan, if you’re living with your partner but aren’t married, you cannot claim your partner as a dependent on your tax return, even if they’re not employed. Federal law bans that if the relationship violates state law, which it still does in Michigan.
That would change if the repeal goes forward, according to Wayne Nesbitt, an assistant professor of accounting at Michigan State University’s Broad College of Business.
“In terms of Michigan being competitive, it puts us on equal footing with the other 48 states that have this law on their books,” Nesbitt said in an interview with News 8 on Thursday.
Nesbitt explains the repeal would give unmarried couples a tax benefit but only in specific cases.
“Most couples, both of them are earning income,” Nesbitt said. “In that case there won’t be any impact from the repeal of the bill. It’s only in those situations where one person is dependent on the other where the repeal of this bill will have an impact on their tax burden.”
The repeal would not put unmarried couples on equal footing with married couples for taxes, Nesbitt explained. That’s because unlike people who are married, unmarried couples still cannot file a joint return.
“The benefits for married couples will still be preserved,” Nesbitt explained. “What really changes with the repeal of the law is that they can claim certain tax credits that they were unable to claim in their current status.”
At the end of the day, Nesbitt believes the repeal will increase tax fairness but only by a limited amount.
“I think it will increase tax fairness on the margin,” the professor said. “Like I said, for most Michigan taxpayers, this repeal will not have a meaningful impact because in most cases, the couples are both income earners.”
The nonpartisan Senate Fiscal Agency doesn’t expect the repeal to have much of a financial impact on the state or local government. The bill repealing the law has been referred to the House Judiciary Committee for consideration.